By Dr. T. Lamb
A gigantic tsunami is rushing over healthcare consumers. Many feel they are drowning in a sea of healthcare options without a boat or life preserver. Many employees are paying premiums for major-medical, they never get to use. Why? Since many employees aren’t aware of what benefits and policies they will need for the following premium year, they are given a multitude of options, with no help determining which are best for their health and situation. Often, these employees misjudge their healthcare needs, which creates another problem. The employee does not ever meet his/her major medical deductible. This means the employee is paying more and more of their medical expenses out-of-pocket, while also paying the premiums for their insurance policy.
According to the 2018 Employer Health Benefits Survey, done by the Henry J Kaiser Family Foundation, the average annual dollar amounts contributed, by covered workers in 2018 were $1,186 for single coverage and $5,547 for family coverage . When the required deductible of an additional $2,500 – $5,000 is added to the premium amount, the total premium and deductible amounts required out-of-pocket can be devasting for many families.
Thankfully, new and exciting opportunities are accessible to help employees meet that financial burden. There is a solution available for riding the wave to affordable healthcare. That solution is twofold: First, implement a superior wellness program that shows verified results. Better health reduces claims and out-of-pocket expenses. Second, make sure the wellness program is combined with an opportunity to use tax savings for purchasing additional supplemental insurance products; those products must, fill the gaps between premium costs and satisfying major medical deductibles. Purchasing these products can be done using the tax savings from participating in the plan, resulting in no out-of-pocket costs for the participant. The Attentive Health & Wellness (AHW) program is the surf board for staying afloat and riding the wave to affordable healthcare.
Wellness programs as we know them have been around since the 1970’s, around the same time that the newest exercise craze became walking and running. These programs were also the first comprehensive focus on wellness. Prior to the 1970’s, the only wellness-style programs were some that tried to combat alcohol addiction . The idea of wellness programs to “prevent” health issues were non-existent. That remained the general trend until the Affordable Care Act.
From the 1970’s until the Affordable Care Act (ACA), the most prominent type of wellness program available was an “activity-based” wellness program. An activity-based program is one that provides each participating employee the opportunity to complete an annual activity (like getting finger stuck to check glucose, cholesterol, and triglycerides) and by completing the activity, the employee is rewarded. (Reward, Example: $50 per month off their medical premium). Many of these activity- based wellness programs are still around often attached to a large medical company’s medical package. In association, this gives participants the perception of a wellness program. The problems with these types of wellness programs are many, but of these, there are two areas of great concern. First, usually the medical company cannot provide any tangible evidence of the effectiveness these activity-based programs have in improving the health of the employees. Next, companies are being charged, either directly or indirectly, to add these wellness programs to their medical bundle. Employers are becoming more skeptical of wellness programs because of these issues. With no guarantee of reduced claims and/or healthier employees, along with the added cost for the employer, it is understandable that companies would prefer not to use such a wellness program.
Thankfully, the Affordable Care Act (ACA) took action. While most of the discussion and disagreements about premium costs, provider choice, preferred family doctors, and etc., are associated with the medical coverage under the ACA, a new focus on wellness emerged. Out of the ACA came two new types of wellness programs—health-contingent and participatory wellness programs .
As with any new product, both of the new types of wellness programs went through an investigative phase from 2013 – 2017. The greatest error the new wellness companies made was trying to do an “activity-based” wellness program and reimbursement the same way as was modeled prior to the ACA. The ACA had moved the activity-based wellness programs to being a sub-category of the health-contingent model. This resulted in significant changes in the codes and regulations required to be a compliant wellness program. Several IRS Chief Counsel memos were published to address compliance issues.
Thanks to the IRS Chief Counsel memos, there is now a clear understanding for developing a compliant participatory wellness program. The participatory wellness program is the most popular and less regulated of the two new wellness models. In fact, all three of the IRS Chief Counsel memos agree on the same format for a compliant program. “Coverage by an employer-provided wellness program that provides medical care as defined under section 213(d), is generally excluded from an employee’s gross income under section 106(a), and any section 213(d) medical care provided by the program is excluded from the employee’s gross income under section 105(b). However, any reward, incentive or other benefit provided by the medical program that is not medical care as defined under section 213(d) is included in the employee’s income, unless excludible as an employee fringe benefit under section 132. While many of the new wellness companies tried to continue as activity-based programs, Attentive chose to follow the IRS guidelines for a participatory wellness program.
Attentive Health & Wellness (AHW) is the first wellness company to structure a participatory wellness program which met the requirements for compliance. All of AHW’s benefits are 213(d) compliant. The employee has access to the Personalized Health Dashboard (PHD) with integrated facial recognition. The PHD identifies present and future health risks, provides risk resolution guidelines for resolving those risk, and fosters the development of a healthier lifestyle. Each participating employee has copay-free access to doctors, nurses, and health coaches. Also, included in the copay-free benefits are counseling services, an interactive virtual recovery system for addiction, a diabetic program, and four Mayo Clinic programs through 24aLife.
Per IRS guidelines, the premiums for the 213(d) compliant wellness benefits can be pre-taxed under a Section 125 Cafeteria Plan, much like a major medical plan is pre-taxed under the Section 125 Cafeteria Plan. This results in tax savings for the employer and for the employee. The employee can use these tax savings to purchase additionally needed supplemental products to fill the gap in financial resources between monthly premiums and high deductibles. If the employee choses to receive the tax savings as cash, the savings would be taxable. By using a self-insured medical expense reimbursement plan (105-11), the employee not only benefits from the tax savings, but also from the reimbursement of the 213(d) compliant wellness benefits. Thus, the employee now has a superior, verifiable-wellness program and a tax advantage for purchasing additional supplemental products.
One of AHW’s earliest clients was a small computer IT company with 13 participating employees. The owner decided to implement the AHW wellness model in an attempt to lower the company’s budget without terminating any employees. Originally, the owner was paying over $55,000 in Health Insurance premiums for her employees and thought her only option was to let some employee go. Using an AHW benefits consultant, she was able to get a new medical plan, reducing her cost from $55,000 to $16,000 per year. She was also able to provide her employees a superior wellness program, telehealth, a GAP policy to cover their deductibles and additional supplemental products. The wellness plan, GAP policy and additional supplemental products were paid with employer and employee tax savings from implementing the plan. Because she chose to offer the AHW wellness program to her employees, she was able to revisit her budget and keep every employee. This story is being repeated over and over again in companies of all sizes. Those who are turning to Attentive Health & Wellness to provide healthcare and wellness solutions are finding the credible solutions they desperately need.
By seeking wise counsel, both employers and employees can make an informed decision on what healthcare solution is right for them. The solution is much more than providing major medical, which in years past was enough to meet most employee’s needs. Now it isn’t. There are many options available to cut costs, reduce taxes, and provide the best medical and wellness benefits for employer and employee. The healthcare crises today is caused in large part because, as individuals, we are having a health crises—from the growing issue of obesity, to the detrimental effects of diabetes and pre-diabetes conditions, to the unhealthy eating habits, and the sedentary lifestyle of the nation.
Employers and employees are not helpless; they do not need to feel that drowning in the sea of healthcare solutions is inevitable. Sadly, half of employers are either late grabbing the surf board, or they choose to simply sink away. The question that must be answered is, “are we going to ride the wave, or get washed over by it?”
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